RETAIL investors are bullish about Hong Kong's stock market but not bullish enough to match the pace of the market's charge, according to a series of surveys by Jardine Fleming Unit Trusts. In December, when the first investor-sentiment survey was done, the 200 household decision-makers questioned predicted that the Hang Seng Index would rise by 3.7 per cent in six months, to 13,800 points. Half a year later, the blue-chip index ended its last trading day under British rule considerably higher, at 15,196.79. 'They have been overly cautious,' JF marketing director Mike Ryder Richardson said of the survey's respondents. 'If perceptions had been closer to reality, they might have invested more and made more with their money.' Not surprisingly, people who already have money in the market - and so have benefited from its current bull run - are more optimistic about the market's prospects than those who have not invested. In the latest survey, conducted from June 10 to June 16, 70 per cent of existing share or unit-trust investors expected the market to rise over the coming six months. Only 44 per cent of those who owned no shares or units were similarly optimistic. The average across the whole sample, investors and non-investors together, was 56 per cent. Mr Ryder Richardson said investors were likely to have a more-sophisticated understanding of the relationship between risk and reward than non-investors, who often tended to focus on the risk side of the equation at the expense of the reward side. 'As those people become more familiar with markets, they take the risk for granted to a greater extent,' he said. Existing investors were more likely than non-investors to make further investments - 75 per cent versus 37 per cent. But Mr Ryder Richardson was pleased with the level of interest among non-investors, arguing that this group represented great potential for growth of the local unit-trust market. However, he said there were three major obstacles to that growth. The first one - the widespread failure to understand that higher returns go with higher risks - has been described above. The second is the common misconception that unit trusts' investment minimums are much higher than they actually are. Mr Ryder Richardson said surveys consistently revealed that people thought the minimum initial investment was from $50,000 to $100,000 when, in fact, it is $15,000. Survey respondents' attitude towards unit trusts changed radically when this fact was made clear. 'They start by saying, 'I could never afford that', to saying, 'When is this product going to be launched?',' said Peter Shortall, associate director of Market Behaviour (Hong Kong), the company that conducted the survey interviews. The final hurdle to growth of the local unit-trust market had more to do with an attitude than a misperception. Mr Ryder Richardson said Hong Kong people wanted to have a feeling of control over their investments, something they did not necessarily think they would retain with unit trusts. Despite Hong Kong's high concentration of fund managers, the local market-penetration rate for unit trusts is estimated at a relatively low 3 per cent to 5 per cent. Mr Ryder Richardson forecast this could rise to 8 per cent within five years. He said the relatively high level of fees charged on funds marketed in Hong Kong - with front-end loads averaging 5 per cent and annual management fees averaging 1 per cent - was not a major factor limiting the local market's growth.